Should Sweden’s Healthcare System Silence Obamacare Fears?

Republican lawmakers have argued long and hard against the Affordable Care Act’s legality, claiming that the reform will drive up healthcare costs, increase insurance premiums, hurt the quality of health care, increase taxes, and blow up the deficit. Republicans in the House of Representatives have vote 37 times to repeal the legislation. Such staunch opposition begs for a closer examination of the Affordable Care Act.

One lens through which to analyze the fears Republicans have about Obamacare is to compare the healthcare reform championed by President Barack Obama to the government-run healthcare systems of countries such as Sweden.

That is just the approach taken by Cornell University economist Robert Frank in a recent New York Times piece. He asked several Swedish health economists to express their opinions about the underlying economics of government-run healthcare. Not only were his sources economists, but “they have spent their lives under a system in which most health care providers work directly for the government.”

He further noted that like economists in most other countries, the individuals he questioned tended to be skeptical of large bureaucracies. “So if extensive government involvement in health care is indeed a recipe for doom, they should have clear evidence of that by now,” Frank wrote.

But none of them voiced the kind of complaints about bureaucrats and exorbitant health costs that often surface when Obamacare is debated. Rather, Frank said that his Swedish colleagues described the performance of their healthcare system as superb. The United States spends more than $8,000 a person per year on healthcare, while Sweden spends less than half that amount. However, evidence shows that health outcomes are far better in Sweden: its infant mortality rate is less than half that of the United States, and males aged years 15 to 60 are almost twice as likely to die in any given year in the United States than in Sweden.

It should be noted that the wide gap can partly be attributed to lifestyle differences. In Sweden, workers are more likely to commute by bicycle than by car, obesity is far less common, and absolute poverty and income inequality — two factors associated with adverse health outcomes — are lower.

When illness or injury does come, the Swedish health care system responds effectively, Frank reported. His research showed that managers have employed economies of scale and consolidated medical services into fewer but larger hospitals. The American system has gone through a similar process, but in comparison, boutique hospitals are much more common in the United States than in Sweden. Larger hospitals mean heavier patient flows, which allow hospital workers to hone their skills through specialization and experience.

Even more important, doctors face different financial incentives in Sweden. Healthcare providers operate under the fee-for-service model, meaning they can earn more by prescribing additional tests and procedures. Comparatively, most Swedish doctors are salaried employees. Additionally, unlike many American health insurance providers, the government groups that manage Swedish health care are nonprofit entities so they do not face the same motivation to withhold care.

One problem did emerge from Frank’s research and that was the wait. The wait for a surgery such as a hip replacement could be as long as three months. However, one of his Swedish colleagues did note that such waits are a design feature that allow facilities to be used at consistently high capacity, and therefore more efficiently.

Comparatively, Frank argued, Obamacare, at least in its initial stages, will not be able to match the cost savings achieved in Sweden. In his opinion, the reason for that is the legislation’s design was heavily constrained from the beginning. Surveys have shown that most Americans who receive coverage through their employers were satisfied with their plans, so a new system that would required people to abandon those plans would have been a political non-starter even if they are an inefficient way to pay for healthcare.

“The encouraging news is that the Affordable Care Act was intended to foster the evolution of a new system that can capture many of the gains currently enjoyed by countries like Sweden,” Frank argued. But, for that to happen, “Congressional critics must abandon their futile efforts to repeal Obamacare and focus instead on improving it.” In his estimation, their core premise — that greater government involvement in healthcare will be disastrous — lacks support in the evidence fromhealthcare systems such as Sweden’s.